At the Corner Deli I'll spread knowledge, comment and the exchange of ideas through discussion of topics of the day, history or whatever moves me to write. The views, fantasies and delusions I write about are tinged with the Jewish spark of my memories of places like the Ashkenaz Deli on Morse Avenue in Rogers Park, Chicago -- a place where you could come and discuss anything. So please, kvell and kvetch a little.

Randy's Corner Deli Library

06 April 2009

It’s 1930 time

Barry Eichengreen and Kevin O’Rourke have an alarming paper in Vox EU, showing that if you take a global view, the world slump since early 2008 is as bad or worse than the slump from 1929-30. It’s full of pictures like this one, showing monthly volume of world trade:

What this says is that the world economy right now is more or less at the point Keynes described in his essay The Great Slump of 1930.

What hasn’t happened — at least not yet — is any counterpart to the catastrophes of 1931: the wave of bank runs in the US, the failure of Credit Anstalt in Austria, and the great perverse response of central banks that was triggered by the death spasms of the gold standard.

What Eichengreen-O’Rourke show, it seems to me, is that knowledge is the only thing standing between us and Great Depression 2.0. It’s only to the extent that we understand these things a bit better than our grandfathers — and that we act on that knowledge — that we have any real reason to think this time will be better.